Conduct a comparative analysis of the capital budgeting process for making expansionary versus replacement decisions. Your objective will be to maximize stockholder wealth. Your analysis should include the following:
•Identify the steps to the process such as the formulation of cash flows, the development of the cost of capital (i.e., weighted average cost of capital), and the calculation of decision metrics, including the net present value and the internal rate of return.
•Utilize the analysis to predict project success/failure in terms of shareholder wealth and other relevant factors. For example, if the net present value of a project is positive, then the project should be undertaken and the expected result will be that shareholder wealth will increase upon the announcement and execution of the project.
•Discuss how each of these two types of decision methods are different and form illustrative, numerical examples to make your points.
•Be sure the illustrations should be in the form of tables showing example analyses with a discussion that guides the reader through the analyses.
•Place special emphasis on how an expansionary project analysis differs from a replacement project and how a domestic project analysis differs from an international project.
Support your analysis with at least five resources. In addition to these specified resources, other appropriate scholarly resources, including older articles, may be included.
Length: 5-7 pages, not including title and reference pages
Your assignment should demonstrate thoughtful consideration of the ideas and concepts presented in the course by providing new thoughts and insights relating directly to this topic. Your response should reflect scholarly writing and current APA standards. Be sure to adhere to Northcentral University's Academic Integrity Policy.
